Wisconsin Psychiatric Servs., Ltd. v. Comm'r of Internal Revenue, Docket Nos. 1270-79
| Decision Date | 26 May 1981 |
| Docket Number | Docket Nos. 1270-79,1271-79. |
| Citation | 76 T.C. 839 |
| Parties | WISCONSIN PSYCHIATRIC SERVICES, LTD., PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENTWESS R. VOGT, PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
During the taxable years 1972 through 1975, Vogt was a psychiatrist employed by Wisconsin Psychiatric Services, Ltd. He maintained an office at his home, which constituted his principal place of business. Held, Vogt is entitled to a deduction under sec. 162(a), I.R.C. 1954, for expenses incurred in maintaining his home office, and a deduction under sec. 167(a), I.R.C. 1954, for depreciation thereon. Held, further: Expenses paid by Wisconsin Psychiatric with respect to an automobile furnished to Vogt are deductible under sec. 162(a), I.R.C. 1954. However, Wisconsin Psychiatric failed to carry its burden of proof with respect to expenses incurred for an automobile furnished to another doctor. Held, further, proper amount of Vogt's interest income for 1973 determined. Held, further, proper useful life for calculating depreciation on Vogt's Florida condominium determined. Held, further, Vogt is entitled to a depreciation deduction on the Florida condominium for only 4 days in 1973. Robert J. Kalupa and John A. Hazelwood, for the petitioners.
Rogelio A. Villageliu, for the respondent.
By statutory notices dated November 21, 1978, respondent determined deficiencies in petitioners' income taxes as follows:
These cases have been consolidated for trial, briefing, and opinion.
After concessions, the issues remaining for our decision are: (1) Whether petitioner Vogt is entitled to deduct home office expenses (including depreciation) in the taxable years 1972 through 1975 under sections 162 and 167, I.R.C. 1954; (2) whether petitioner Vogt received dividend income in 1972, 1973, and 1974 from the personal use of an automobile furnished to him by Wisconsin Psychiatric Services, Ltd., and whether petitioner Wisconsin Psychiatric Services, Ltd., is entitled to deduct expenses relating to automobiles furnished to corporate officer-employees (including Wess R. Vogt) for the taxable years ended April 30, 1973, and April 30, 1974; (3) whether respondent erred in determining petitioner Vogt's interest income for the taxable year 1973; and (4) whether petitioner Vogt is entitled to a depreciation deduction on a Florida condominium for the taxable year 1973, and whether respondent erred in determining a 40-year useful life for the Florida condominium.
Some of the facts have been stipulated and are so found. The stipulation of facts and the exhibits attached thereto are incorporated herein by this reference.
Petitioner Wisconsin Psychiatric Services, Ltd. (Wisconsin Psychiatric), is a Wisconsin service corporation organized to provide psychiatric services at various locations in the Milwaukee, Wis., metropolitan area. During all of the years in issue, its principal office was located in Whitefish Bay, Wis. Petitioner Wisconsin Psychiatric filed Federal corporate income tax returns (Form 1120) for fiscal years ended April 30, 1973, and April 30, 1974, with the Internal Revenue Service Center at Kansas City, Mo.
Petitioner Wess R. Vogt (Vogt or Dr. Vogt) resided in Mequon, Wis., at the time of filing his petition herein. Petitioner Vogt filed a joint Federal income tax return with his nonpetitioning spouse for the calendar years 1972, 1973, 1974, and 1975. These returns were filed with the Internal Revenue Service Center at Kansas City, Mo.
During the taxable years in issue, petitioner Vogt was a psychiatrist-employee-officer of Wisconsin Psychiatric. Dr. Vogt's stock ownership percentage in the corporation was as follows:
+---------------+
¦Year ¦Share ¦
+------+--------¦
¦ ¦ ¦
+------+--------¦
¦1972 ¦33% ¦
+------+--------¦
¦1973 ¦33% ¦
+------+--------¦
¦1974 ¦50% ¦
+------+--------¦
¦1975 ¦50% ¦
+---------------+
The main floor and the basement of the Wisconsin Psychiatric offices at Whitefish Bay, Wis., were used for administrative work connected with the operation of the corporation. The second floor was used by other employees of Wisconsin Psychiatric, Drs. Steinhaus, Andersen, and Swartwout, to see patients. Petitioner Vogt also used the second floor to see patients on rare occasions or in an occasional emergency. Anything related to Wisconsin Psychiatric, including patient billing, insurance filing, collections, scheduling of appointments, and recordkeeping, was performed at the corporation's principal office at Whitefish Bay. The corporate office also took care of the above-stated administrative duties with respect to Dr. Vogt's patients who were being seen at his “home office.”
During the period from 1972 through 1975, one of the doctors employed by the corporation, Dr. Martin, suffered three heart attacks. For 3 or 4 months following each heart attack, petitioner Vogt saw the Wisconsin Psychiatric patients, formerly assigned to Dr. Martin, at the corporation's downtown Milwaukee office and at Elmbrook Memorial Hospital in Brookfield, Wis. In addition, petitioner Vogt's duties during the taxable years 1972 through 1975 included serving as Medical Director of the Ivanhoe Medical Hospital (at least 4 to 6 hours per week, seeing patients and developing a program for patients suffering from alcoholism), Medical Director of St. Mary's on the Hill Day Hospital Program (group therapy, teaching, individual sessions with inpatients and outpatients from 9 a.m. to 4 p.m., and developing and supervising the medical program), staff member of Columbia Hospital (seeing inpatients and attending meetings), and seeing outpatients at his home in Mequon, Wis. He also saw patients at the Pavilion Nursing Home until sometime in 1972. During a typical week in the years at issue, Dr. Vogt conducted 10 to 15 sessions at his home office with regular outpatients.
Petitioner Vogt purchased his residence in Mequon, Wis., on or about August 1971. Shortly after its acquisition, petitioner constructed an addition which consisted of a bedroom, a waiting room, and an office. A new entranceway to the waiting room was constructed to permit convenient access to the home office from outdoors. In addition, a separate sliding door was included in the office to permit patients to exit after their sessions without going through the waiting room. The office and the waiting room cover an area of approximately 360 square feet of the total residence's 3,500 square feet. This area constitutes 10.29 percent of the total available space in the residence.
During the taxable years in issue, Vogt's home office contained a fireplace, a couch, several lounge chairs, files, a desk, and a professional library. The office also contained a telephone, which had a different number than the telephones in the rest of the house. The locks on the office and waiting room doors required different keys than the locks in the rest of the house. Dr. Vogt had the only keys to the office locks. Neither Dr. Vogt nor his family made personal use of the home office.
For the years 1972 through 1975, Wisconsin Psychiatric did not reimburse petitioner Vogt for expenses incurred in maintaining a home office. In fact, prior to August 16, 1975, Wisconsin Psychiatric had no formal policy encouraging the use of a home office. However, on that date, in a meeting of the board, it was decided:
Wisconsin Psychiatric Services previously requested that the physicians have Home Offices and is now reiterating this policy. All physicians working fro [[[sic] Wisconsin Psychiatric Services, Ltd., will have Home offices in which they can treat patients on a regular and on an emergency basis. Also where confidential records may be kept.
Although this declaration encouraged Dr. Vogt to continue to maintain his home office, it was not a condition of employment. Some of the staff psychiatrists of Wisconsin Psychiatric (other than Dr. Vogt) did not have home offices or did not use their home offices to see patients. Dr. Vogt admits that the use of his home office for seeing patients was somewhat for his own convenience, but also was for the convenience of patients and Wisconsin Psychiatric.
Home office expenses claimed by petitioner Vogt, and in issue herein, are as follows:
+-----------------------------------------------------------------------------+
¦ ¦1972 ¦1973 ¦1974 ¦1975 ¦
+------------------------------------------+-------+------+---------+---------¦
¦ ¦ ¦ ¦ ¦ ¦
+------------------------------------------+-------+------+---------+---------¦
¦10 percent1 of property expenses other ¦ ¦$609 ¦ ¦ ¦
¦than depreciation ¦ ¦ ¦ ¦ ¦
+------------------------------------------+-------+------+---------+---------¦
¦17.15 percent1 of property expenses ¦ ¦ ¦$1,087.55¦$1,173.49¦
¦other than depreciation ¦...To continue reading
Request your trial
-
Lary v. United States, Civ. A. No. CV82-L-5689-NE.
...250, 90 L.Ed. 203 (1946). The plaintiffs' attempt to draw parallels between their situation and the case of Wisconsin Psychiatric Services v. Commissioner, 76 T.C. 839 (1981), is faulty. In Wisconsin Psychiatric Services, the taxpayer, a doctor, conducted the major portion of his outpatient......
-
Romer v. Commissioner
...normal and deductible business travel. Strohmaier v. Commissioner [Dec. 53,483], 113 T.C. at 113-114; Wis. Psychiatric Servs., Ltd. v. Commissioner [Dec. 37,923], 76 T.C. 839, 849 (1981); Curphey v. Commissioner [Dec. 36,753], 73 T.C. 766, 777-778 As we held above, petitioner failed to prov......
-
Walker v. Comm'r of Internal Revenue, 20919–91.
...of business” and the travel is in the nature of normal and deductible business travel. Wisconsin Psychiatric Servs., Inc. v. Commissioner, 76 T.C. 839, 849 (1981); Curphey v. Commissioner, 73 T.C. 766, 777–778 (1980); Dudley v. Commissioner, T.C.Memo. 1987–607, affd. per curiam without publ......
-
Barnes v. Commissioner, Docket No. 16389-81.
...F.2d 102, 105 (2d Cir. 1982), affg. Dec. 37,955 76 T.C. 876 (1981), cert. denied 459 U.S. 906 (1982); Wisconsin Psychiatric Services v. Commissioner Dec. 37,923, 76 T.C. 839, 849 (1981); secs. 162, 262; secs. 1.162-2(e), 1.212-1(f), 1.262-1(b)(5), Income Tax Regs. Similarly, transportation ......
-
Ruling on the deductibility of commuting expenses disagrees with Walker but expands the unanswered questions.
...is regular or temporary and regardless of the distance." (Curphey, supra; Mazzotta, 57 TC 427 (1971); Wisconsin Paychiatric Services, 76 TC 839 (1981); Green, 59 TC 456 (1972); Fryer, TC Memo The difficulty with applying the Service's new ruling is the amorphous use of "principal place of b......